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The Rise and Fall of Armies

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  • Jonathan J Adams

    (Department of Economics, University of Florida)

Abstract

For a thousand years, income growth was associated with a rising military employment share. But this share peaked in the early 20th century, after which military employment shares fell with income growth. I argue that rising military shares were driven by structural change out of agriculture, and the recent declines are driven by substitution from soldiers towards military goods. I document evidence for this substitution effect: as countries' incomes rise, the ratio of their military expenditure share to their military employment share rises too. I introduce a game theoretic model of growth and warfare that reproduces the time series patterns of military expenditure and employment. The model also correctly predicts the cross-sectional pattern, that military employment and expenditure shares are decreasing in income during wars. Finally, I show that faster economic growth can reduce military expenditure in the long run.

Suggested Citation

  • Jonathan J Adams, 2017. "The Rise and Fall of Armies," Working Papers 001002, University of Florida, Department of Economics.
  • Handle: RePEc:ufl:wpaper:001002
    as

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    File URL: http://users.clas.ufl.edu/adamsjonathan/files/riseandfall.pdf
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    References listed on IDEAS

    as
    1. Cemal Eren Arbatlı & Quamrul H. Ashraf & Oded Galor & Marc Klemp, 2020. "Diversity and Conflict," Econometrica, Econometric Society, vol. 88(2), pages 727-797, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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